Cargill sells palm oil business in Papua New Guinea

Cargill will sell off its palm oil holdings in Papua New Guinea (PNG) to focus on operations in Indonesia, reports the Star Tribune. The $175 million sale involves 62,000 ha of oil palm across three plantations and several mills.

“We believe there is more value for our shareholders and customers in focusing on Indonesia,” said the company in a statement. “Our PNG oil palm plantations were the only investment we had in PNG. Since no other Cargill business is actively investing in PNG at this time, we could not build any synergies to increase the value of this investment.”

The sale marks an end to a controversial run in PNG. Cargill was criticized by activists and local NGOs for environmental damage and social concerns.

Cargill has recently expanded palm operations in Papua, on the Indonesian half of New Guinea, but the Minnesota-based company still faces complaints similar to those that plagued it in PNG.

Palm oil is the world’s highest-yielding commercial oil seed, making it a cheap source of vegetable oil, which is widely used in processed foods and cosmetics. But production has often come at the expense of tropical rainforests and carbon-rich peatlands, making the industry a target for green groups.

(09/25/2009) Papua New Guinea, the independent eastern half of the world’s second largest island (New Guinea), houses one of the planet’s last frontier forests. These forests support a wealth of plants and animals as well as the Earth’s most diverse assemblage of cultures—some 830 languages are spoken in Papua New Guinea (PNG), representing more than 12 percent of the world’s 6,900. But PNG’s forests are fast-changing. Between 1972 and 2002 PNG lost more than 5 million hectares of forest, trailing only Brazil and Indonesia among tropical countries. Forest loss has been primarily a consequence of industrial logging and subsistence agriculture, but large-scale agroindustry—especially development of oil palm plantations—has emerged as an important new driver of land use change. Dozens of international companies have set up operations in the country over the past decade, including Cargill, an agribusiness giant based in Minneapolis. While Cargill says it is committed to sustainable and responsible palm oil production across its three plantations in PNG, the firm has been targeted by local and international NGOs, which claim it has polluted rivers and deceived local communities into signing agreements they do not understand. Some landowners say they are receiving few of the benefits oil palm promised to deliver, while losing their independence—they are now reliant on an export-oriented crop they can’t eat. Opposition to further oil palm expansion is now growing, especially in Oro Provice, where Cargill’s plantations are based.